Tri-City surgery deal falls short of projection

CEO said partnership could bring in as much as $12 million a year

Medical Acquisition

Founded by Charles Perez, Medical Acquisition Co. is a factoring company. It purchases a hospital’s rights to collect money from uninsured patients who have potential claims against a third party. If patients do not have a doctor or a lawyer, MAC provides them with a list of participating hospitals and attorneys.

MAC makes its money if the patient wins its claim.

MAC pays the hospital $4,000 for same-day outpatient services. If the procedure requires an inpatient stay, the hospital pays MAC $4,000 per day, and $2,000 a day for acute rehabilitation.

The hospital also pays MAC for other miscellaneous charges, such as for $600 for MRIs, and $550 for CT scans.

When Tri-City Healthcare District announced an agreement with a Carlsbad insurance underwriter in late 2009, hospital CEO Larry Anderson said the deal could generate as much as $12 million in additional annual revenue.

Anderson said the partnership with Medical Acquisition Co., or MAC, could achieve that by bringing as many as 500 patients through Tri-City’s doors for complex spinal and orthopedic surgeries.

So far, the deal has generated $138,000 in net revenue.

MAC purchases from hospitals the rights to collect from uninsured patients who have potential third-party claims. The company also helps recruit uninsured patients for medical care they might not otherwise be able to obtain, based on those potential future claims.

The public health agency’s use of MAC has drawn a lawsuit by a former debt collector for the hospital, contesting the claims of it being a good deal for the hospital.

Anderson said the hospital’s strategic relationship with MAC — which has grown to include cooperation on a medical office complex to bring in business — is more valuable than just the surgery agreement.

Tri-City and MAC started doing business in 2009, shortly after Anderson took over as CEO. MAC had worked with several hospitals that Anderson and Tri-City Chief Operating Officer Casey Fatch used to run. Anderson said the group helped Tri-City fill a void left when competitor Scripps Health purchased a medical group that provided Tri-City with one-third of its primary-care doctors.

“At that point in time, MAC offered a new line of business to help partially fill that gap,” Anderson said. “MAC benefits the hospital not only by the number of surgeries that are done here but also by introducing new medical staff members.”

Hospital administrators said that the revenue from MAC has helped the district, which was in worse shape financially at the time the deal launched.

“The work we have done with MAC is very profitable,” Anderson said.

MAC founder and owner Charles Perez acknowledged that the revenue under the surgery partnership has not met expectations. He said the new building will change that.

“I have a lot of surgeons who want to do surgeries, and I don’t have a place for them to practice,” Perez said. “Once the new complex is done, the business is going to take off.”

The development is a 60,000-square-foot office complex planned for two acres at the hospital. The land is currently used as a parking lot.